A shopping center in a wealthy Mexican neighborhood overflows with
US brand products. A small jar of Skippy peanuts butter for $2.70. A
sixpack of Budweiser for $5.70. Half a litre of STP car wax for $3.50.
Various models of Black and Decker toaster ovens for between $92 and
$162. An Atari XE Video Game System for $189. Wives of corporate and
government officials pile up their purchases at the cash registers and
pay with Visa or Mastercard.

Across the street, dozens of men are hard at work, building yet
another store for the well-to-do. They make $3.80 per day. For lunch,
they eat a few tortillas and beans. After work, many will spend an hour
or more riding a public bus home to an outlying colonia. Their homes
are likely to have no running water, as only half of Mexican households
do. Part of their earnings will go to buy basic supplies for their
children's schools--chalk, light bulbs, glass for broken windows --
that the government says it can't afford to provide.

Open for business

These are the contradictions of Mexican life in an era of free
trade. For a decade, Mexico has acceded to pressure from US
corporations to open its borders to investment and imports and to
maintain a "friendly" business environment. The result has
been grinding poverty and disease for the great majority of citizens,
juxtaposed to First World wealth for a small elite.

Now, Presidents Bush and Carlos Salinas and Prime Minister Mulroney
are planning a trinational free trade agreement (FTA) which would
magnify the changes of the last ten years. The FTA negotiations have
provoked a national debate in Mexico, with opinion clearly divided along
class lines.

"Protectionism is depriving Mexican companies of valuable
technology links, and US corporations of the vital work force that
exists south of the border," proclaimed one of Mexico's
largest banks, Banca Serfin, in advertisements saying it
"wholeheartedly endorses" an FTA.

"We are already living with the effects of the free trade
philosophy," said Alfredo Dominguez, a leader of the Authentic
Labour Front (FAT). "It means total freedom for the transnational
corporations. What they want is no democratic unions, no environmental
regulations, no requirements to pay a living wage, and no political
democracy."

A Mexico-US-Canada FTA would be the climax, said Dominguez, of a
process of "denatioanalization" which picked up speed with the
so-called "debt crisis" in the early 1980s. Mexico's
rulers had borrowed billions of dollars from US banks and US-backed
international lending agencies with the promise to repay with income
from newly discovered oil reserves. Some of the loan money was used for
public works projects to maintain social peace without redistributing
wealth. Billions went into the foreign bank accounts of officials of
the Institutional Revolutionary Party (PRI) which has ruled Mexico for
the past 62 years.

After oil prices fell in 1982, the International Monetary Fund,
World Bank, and private banks cut off new loans to cover the old ones
until Mexico agreed to open its economy to greater control by US
corporations. In keeping with those agreements, Mexico issued new rules
that allow 100 per cent foreign ownership of corporations in most
sectors, where previously foreign investment was prohibited in some
sectors and limited to a 49 per cent share in others. At least 25 major
economic sectors either have been or will be deregulated. More than 900
publicly owned corporations in key areas such as steel, petrochemicals,
mining, transportation, communication, banking, and food production,
packing and distribution have been opened to private, including foreign,
investors. Import tariffs which previously reached a maximum of 100 per
cent were cut to a trade-weighted average of about 11 per cent, and
quotas were removed for 97 per cent of imported items.

A combination of wages controls, tax "reform," and other
economic policies increased the percentage of the annual gross national
product which went to owners of capital from 48 per cent to 65 per cent,
while the percentage going to wage earners dropped from 41.7 per cent to
27.7 per cent. The buying power of the minimum wages dropped from more
than $7 per day to less than $4 per day.

"This substantial redirection of the role of the state in the
Mexican economy signals to investors and traders that Mexico means
business," applauded Gerard Van Heuven, spokesman for the US-Mexico
Chamber of Commerce.

Taking advantage of the new conditions, the number of US-owned
assembly plants -- known as "maquiladoras" -- which use cheap
labour in Mexico to produce for the US market soared from fewer than 600
in 1979 to nearly 2,000 today. The number is growing at a rate of more
than 15 per cent per year, or an average of more than one new plant
opening every working day. Today, the top three private sector
exporters from Mexico to the US are Chrysler, Ford, and General Motors.

Making it permanent

Yet US corporations are not satisfied. They have testified in the
US Congress that they want a formal FTA to remove remaining restrictions
on foreign investment in such sectors as petroleum, banking, insurance,
agriculture, and transportation; complete the process of deregulation
and privatization; and gradually remove remaining tariffs and trade
quotas.

Perhaps most importantly, they seek to codify their gains of the
past ten years in order to provide protection from possible political
change in Mexico. Most of those breakthroughs were accomplished by
executive decree by a ruling party that is on shaky political ground,
apparently resorting to massive vote fraud in order to "win"
the 1988 presidential elections and a series of subsequent state and
local elections. The opposition Party of the Democratic Revolution
(PDR), whose leader, Cuauhtemoc Cardenas, is widely viewed as having
actually been elected president in 1988, does not support most of the
recent economic policy changes. An FTA would, in the words of the US
International Trade Commission, provide "some assurance that the
executive regulations were permanent, and could not simply be easily
changed by the next Mexican administration."

Mexican elite to profit

All this sounds fine to some Mexicans -- primarily those who are
getting their share of the spoils of economic integration through
partnerships and joint ventures with US companies. For example, the
Mexican glass company known as Vitro which was invited to US
congressional hearings to give the "Mexican perspective" on
the FTA has joint ventures with Ford, Samsonite, Whirlpool,
Ingersoll-Rand, and Owens-Corning Fiberglas.

Other joint ventures by US and Mexican corporate interests involve
takeovers of the more than 900 companies the government is privatizing.
Chase Manhattan Bank now co-owns Mexicana Airlines along with Mexican
corporate investors. Southwestern Bell has taken over the
country's phone company along with a Mexican conglomerate which
already had joint ventures or franchise agreements with Dupont, B.F.
Goodrich, Philip Morris, Hershey's, and Denny's.

The blurring of interests between US and Mexican elites is further
illustrated by the multiple roles that individual officials play.
Salinas' top adviser for international trade, for example, is
Claudio X. Gonzalez, chairman of the Mexican affiliate of the US paper
products giant, Kimberly Clark.

For Mexico's big corporations, binational joint ventures are a
way to not only increase profits but also to squeeze out small and
medium-sized competitors. In addition, negotiation of an FTA provides a
context in which to demand changes in Mexican labour laws which, while
poorly enforced, contain important rights won in the revolution of 1917.
Current laws "work against productivity and competitiveness in the
international economy," according to the National Chamber of
Industries, which adds that new tax breaks will be needed to help
business compete in a free trade environment.

Salinas and his corporate allies say Mexicans will benefit from an
FTA because increased investment from the US, Canada, and other
countries will mean new jobs. That, the president says, will allow
Mexicans to find work at home instead of immigrating north: "With a
free trade agreement, Mexico will export products, not people."

In addition, says Salinas, Mexican companies will be forced to
become more "competitive" when foreign firms have greater
freedom to operate in the country.

No development with

low wages

But Mexican opponents of free trade argue that an FTA will not
deliver the benefits Salinas and the corporations promise because it is
based on maintaining low wages and unhealthful working conditions in
order to attract foreign capital.

"The transnationals" free trade strategy might bring
Mexico a few more $4 per day jobs, but that is not a strategy for
genuine development," said Jose Santos Marinez, a leader of the
Mexican Ford Workers Democratic Movement. "As long as we are not
paid enough to buy products that other workers make, the jobs there are
will not be contributing to the creation of more jobs."

Martinez points out that the maquiladora program has provided an
average of 40,000 new jobs annually during the past decade, while the
influx of young people into the work force means that the country needs
about one million new jobs per year. The added maquiladora jobs
certainly didn't result in a reduction of illegal immigration. In
fact, they attracted more people from Mexico's countryside to the
border cities, many of whom later headed north rather than try to
survive on 50 or 60 cents per hour. Indeed, turnover among maquila
workers averages 10 per cent per month (or more than a complete work
force changeover every year), according to the National Bank of Mexico.
Despite a decade of foreign investment, more than 50 per cent of
Mexicans able and willing to work are unemployed or underemployed.

The $13 per hour difference in what transnationals pay in wages and
benefits in Mexico and in the US or Canada means that, in 1990 alone,
more than $20 billion left the country as a workers' subsidy to
corporate profits, according to the Unified Union Front (FSU), a
coalition of more than 60 independent unions and democratic opposition
movements. Had that money been paid as wages in Mexico, it could have
been used to create new jobs through a stronger internal market.

With wages so low, "production in Mexico has been re-oriented
toward goods and services for export or for those few who have money,
rather than toward meeting the needs of the people," notes Alberto
Arroyo of the Mexico City research center, SIPRO. For example, the
country has a deficit of six million housing units, according to
government figures. Yet, given the low purchasing power of the typical
family, big capital is only interested in constructing tourists hotels
and luxury developments.

Critics of an FTA argue that domination by US transnationals will
hardly make Mexican firms more competitive. In the agricultural sector,
for example, small farmers and cooperatives are being told to compete
with US transnationals which "annually receive subsidies of more
than $50 billion" from their own government, according to Prof.
Jorge Calderon of the National Autonomous University of Mexico.

"Mexico has the natural resources and economic infrastructure
to provide its people with an adequate standard of living,"
Calderon said. "Yet, our country imports more than 10 million tons
of agricultural products per year--one-third of the population's
food needs. This will not be corrected by greater transnational
penetration in our countryside and the indiscriminate authorization to
import grains even during our own harvest times, a situation which a
free trade agreement would make permanent."

Organizing for alternatives

Mexican PRD leader Cardenas told the British Columbia Federation of
Labour convention last year that, instead of an FTA, his party favors a
trinational North American "development agreement" that would
"be based on common standards for labour, social, and environmental
rights." In addition, it would "guarantee the sovereign
rights of each nation to develop its own natural resources, particularly
oil, to meet the needs of its people."

Cardenas has also said that any agreement for free movement of
goods and capital ought to assure freer movement of people between
countries. The balance of power between labour and transnational
corporations would change dramatically, he argues, if there were fewer
immigration restrictions to make Mexican workers feel they had to accept
low pay on both sides of the border.

According to other FTA opponents, Mexico should not be abandoning
government programs that functioned poorly because of corruption and
inefficiency, but reforming them to meet social needs.

"A democratic government would have to seriously review the
denationalization and privatization of publicly owned companies,"
said Prof. Calderon. "In the rural sector, what is needed is to
strengthen control by campesinos [farm workers and peasants] over public
institutions and companies, improve their efficiency and productivity,
and significantly increase economic and technological support [they
receive]."

Achieving any reversal of the economic policies of the
transnationals and the three North American governments obviously
depends on building a strong, trinational grassroots movement. During
the past year, progressives in the three countries have increased
efforts to identify common concerns:

* Last October, the Unified Union Front co-sponsored a conference
on free trade with the Pro-Canada Network (PCN), at which the two
coalitions resolved to establish a bilateral commission to coordinate
further cooperation.

* PCN representatives and Mexican opposition political activists
joined the AFL-CIO and US environmental organizations in a January media
event against free trade in Washington, D.C.

* Later the same month, Canadian, Mexican, and US labour and social
activists met in St. Paul, Minnesota, to help organizations there plan
creation of state-wide coalition against free trade.

* In February, two PCN activists attended a Forum on Free Trade
with nearly 50 Mexican labour, environmental, women's and religious
organizations, where groups resolved to hold a high-profile, anti-FTA
event in Mexico City in the spring.

Last year, the Canadian Auto Workers hosted a visit by Mexican Ford
Workers and later sent a representative to a "Common
Interests" conference with US and Mexican counterparts. Those
contacts led to unprecedented, coordinated workers' protests in all
three countries on Jan. 8 to oppose free trade and support democratic
labour movements in Mexico.

The common challenge for progressives in the three nations, say
Mexican activists, is to make sure that conferences and delegations lead
to more joint actions like the Jan. 8 protests and to broad public
education campaigns like the one organized by Canadian organizations
during the US-Canada FTA negotiations.

"Let's see, if the Canadians distributed one million
copies of their attack on free trade, and if Mexico's population is
three times theirs, that means we'll need three million copies of
our own free trade flyer," said one activist at February's
Forum on Free Trade. Most people in the room laughed instinctively, not
at their colleague's reasoning, but at the thought of raising the
necessary money from a nation of people who make $3 or $4 per day.

COPYRIGHT 1991 Canadian Dimension Publication, Ltd.
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